Rate Forecasts Raised

The 30-year fixed-rate mortgage averaged 6.32%, slipping 2 basis points from a week ago, Freddie Mac’s latest Primary Mortgage Market Survey reportedly showed. At this time last year, the average was 31 BPS lower.

The Mortgage Bankers Association’s updated mortgage finance forecast shows the 30-year average jumping to 6.5% next quarter and ending the year at 6.7%, respectively 10 BPS and 20 BPS higher than the estimates forecasted for these periods a month earlier.

This week, half of the 100 mortgage “expert” panelists surveyed by Bankrate.com believe mortgage rates will rise over the next 35 to 45 days, one-third think rates will remain relatively unchanged and the remainder think rates will fall.

The average for the 15-year edged down 1 BPS to 5.97% this week, Freddie said.

The gauge for long-term mortgage rates, the 10-year note, traded with a 4.73% yield at Thursday’s close, 11 BPS higher than a week ago.

“The most recent economic indicators released this week showed that inflation is, indeed, being held in check,” said Frank Nothaft, Freddie chief economist. “That news allowed long-term mortgage rates to drift a little lower for the second week in a row. Shorter-term rates, however, rose in reaction to a recent speech by Chairman Bernanke, of the Federal Reserve Board, that hinted at even further rate hikes this year.”

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.96%, edging up 3 BPS from last week, Freddie said.

Up 4 BPS from a week earlier, Freddie said 1-year Treasury-indexed ARMs averaged 5.41%. The reported 4.78% level of the 1-year T-bill itself Wednesday reflected a weekly incline of just 1 BPS.

MBA expects the 1-year ARM to average 5.5% next quarter and 5.6% at yearend, both levels 10 BPS higher than last month’s predictions.

The volume of mortgage applications slipped about 2% from the prior week, according to the Mortgage Bankers Association’s latest Weekly Mortgage Applications Survey for the week ending March 17.

Refinances, which were mostly unchanged from the prior week, represented over 38% of the latest week’s applications, MBA said, while the ARM share decreased to 28%.